- The concept of guanxi is not unique to China
- Guanxi in China is often based on transactions & reciprocity not emotional personal connections
- "Face" makes guanxi different in china
- A LinkedIn will succeed in China, just maybe not the LinkedIn
A recent article by Agence France-Presse about the challenge a company liked Linkedin will face in China triggered this post. Many people Chinese people improperly convey guanxi's (关系) meaning to foreigners, and in turn many non-Chinese misunderstand guanxi.
The main premise of this article is Linkedin will struggle in China to overcome the obstacle of guanxi. In the article, Wei Wuhui, a professor at Jiaotong University in Shanghai, states online alternatives to guanxi like LinkedIn will have a hard time supplanting guanxi's deeply embedded cultural role. He states, "I don’t think the Chinese middle class has the same needs in terms of professional networks as people in the West, because of the concept of guanxi. In China people do not want to meet with people they don’t know. The Chinese have a culture based on relationships among family members and close friends.” Absolute nonsense.
Guanxi (关系) is usually defined as China’s system of personal relationships or connections reinforced by mutual favours which plays a vital role in getting things done, whether conducting business, navigating government bureaucracy, or anything which requires a favor to get something done. It is the words "personal" and "relationships" which creates the misunderstanding how Chinese and non-Chinese understand guanxi. Guanxi in China is purely about reciprocity.
THE CONCEPT OF GUANXI IS NOT UNIQUE TO CHINA
Contrary to popular portrayal, guanxi is not something special or unique about operating in China. The concept of people trading favors based on one’s experience or position or using a relationship to get something done exists in every culture. This is as old as the human race. In other parts of the world guanxi is called:
- Greece: rousfeti (literally reciprocal special favor)
- India: vyavahar
- Italy: arrangiarsi
- Poland: załatwić
- Russia: blat or swjasi
GUANXI IN CHINA IS OFTEN BASED ON TRANSACTIONS & RECIPROCITY NOT EMOTIONAL
Guanxi in China is based on transactions and reciprocity and often completely lacking any emotional connection to the other party. One of the reasons corruption is so prevalent and entrenched in Chinese culture, which is not to say it does not exist anywhere else because if of course does, is because many relationships are not based on friendship or family ties, but rather "what have you done for me lately". A recent confession by a retired Chinese government official online in Xinhua (since taken down by censors) but reported in the South China Morning Post exposes the farce of guanxi:
- "A retired Chinese official said he was disappointed that old acquaintances, who used to give his children lai see packets containing thousands of yuan, did not give them any this year, reported Xinhua state news agency this week. Nothing has changed except that he’s now retired, the former official said. “In the past a single red envelope could contain as much as 10,000 yuan (HK$10,240),” the unnamed former official said. But "friends" stopped passing out heavy lai see packets after he retired. Now it’s only relatives who give out red envelopes - and much thinner ones."
China is full of open secrets to instant guanxi in all parts of China society:
- School headmasters and teachers accept bribes.
- Doctors take special care of individual patients.
- Drug companies bribe their way into hospitals.
- Suppliers bribe key people at companies they want to supply.
- Judges can be bought.
- Government officials are in bed with the business owners they are supposed to supervise. In many cases, even owning shares (directly or indirectly via family members) in the companies they are supposed to oversee.
In China guanxi is closely tied to and actually reinforces corruption throughout all of Chinese society including government and business. If you cannot trade favors, you can just buy them. If you do not have guanxi based on a personal relationship such as relative, friend or schoolmate, bribes speed up the relationship building process.
The best guanxi is of course established over time. A company’s guanxi will become established through its own relationships and reputation with its business partners and government officials. A foreign company’s guanxi will ultimately be based on the number of people it employs, the taxes it pays, and its social contributions. Guanxi does not quarantee success. Coca-Cola learned this when its proposed acquisition of Huiyuan was rejected by the Chinese government.
The long-term is another myth in China. Guanxi is all about what can you do for me right here, right now.
"FACE" MAKES GUANXI DIFFERENT IN CHINA
Face (面子) and guanxi are closely intertwined within Chinese culture. When a real personal relationship is involved, not extending guanxi will impact one's face or perceived status. But this only applies when there is a real personal relationship. When guanxi is based on transactions and reciprocity, guanxi in China is the same anywhere else in the world.
A LINKEDIN WILL SUCCEED IN CHINA, JUST MAYBE NOT THE LINKEDIN
It is no secret most Western internet companies have been spectacular failures in China. What is usually missed by people is the reason they fail. By the time the Western internet company enters the China market, whether Google, eBay, Groupon, etc., there are already many entrenched local competitors with a long head start. The foreign company does not give Chinese users a good reason to switch. A LinkedIn in China will probably succeed, it just may not be the LinkedIn and may be a local competitor. Professional social networking sites have yet to take off in China, partly because language is an issue. LinkedIn is not in Chinese, yet.
Wei Wuhui, a professor at Jiaotong University in Shanghai, thinks business network sites face a huge extra obstacle to success of guanxi. He states online alternatives will have a hard time supplanting guanxi's deeply embedded role in Chinese society. He does not think the Chinese middle class has the same needs in terms of professional networks as people in the West, because of the concept of guanxi. “In China people do not want to meet with people they don’t know. The Chinese have a culture based on relationships among family members and close friends.” True, but guanxi in China is often not about family members and close friends.
Alibaba is an interesting case of why a LinkedIn will succeed in China. Alibaba's success was built on a platform providing a means for Western buyers to connect with Chinese suppliers. '"Connect" being the operative word. Chinese companies are active participants in the platform because it opens a window to new business opportunities. This is why a LinkedIn will do well in China. A LinkedIn is a means to develop new opportunities by helping a user develop and maintain their guanxi.
There are several additional reasons a LinkedIn will succeed in China. For those who have spent time in China, it is no secret fake qualifications are rife in China. There is also distrust of dealings over the internet because of fraud. Viadeo says it is developing a system to check profiles, akin to Twitter’s verified identities. This is something companies will find valuable as a tool to weed through candidates with fake backgrounds. Candidates with legitimate backgrounds will aggregate on a LinkedIn, because companies will be attracted to this user base when looking for new hires.
Chinese employees are notorious for job hopping. A user will be attracted to a LinkedIn to be able to find and have access to company job postings matching their interests and background. It is all about maximizing employment opportunities. If a LinkedIn can successfully do this, professional social networks will become successful in China. The internet allows people to maintain one's close/strong connections and develop your new ones. What Chinese person looking for new opportunities would not be attracted to this?
Interesting side note, Professor Wei Wuhui's name is a homonym for wùhuì (误会), a noun or verb meaning misunderstand.
- "LinkedIn, others face challenges against China ‘guanxi’", Agence France-Presse, February 24, 2013.
- "Retired official says family no longer receives heavy lai see packets", South China Morning Post, February 15, 2013.
CKB Solutions is all about real solutions for the real world. To learn how we can help your business, contact Greg Kovacic in Hong Kong.